By sanctioning on December 18, 2014, 13 suppliers of personal and home care products to a fine of nearly €1 billion (Decision), the French Competition Authority (FCA) imposes a new record fine that leaves a feeling of ‘déjà vu’.
Less than four years after being subjected to a fine of nearly €400 million in the laundry detergents case in 2011, Colgate Palmolive, Henkel, Unilever and Procter & Gamble have again been penalized, together with nine other home and personal care products suppliers, for participating in anti-competitive exchanges of information in the context of their negotiations with retailers.
This new development may appear surprising insofar as both Henkel and Procter & Gamble had applied for leniency, each by filing a single application covering both cases in 2008, and, as all things being considered, detergents are nothing but home care products, which could have led the FCA not to sever the two cases.
However, in addition to the significant benefit of having accelerated the closing of the laundry detergents case, which represented no less than 88 per cent of the fines imposed in 2011, it should be noted that the four laundry detergents suppliers accounted this time for less than a third of the prosecuted undertakings. In addition, the scope of the products concerned by the practices was clearly much broader. But above all, the two cases appear to be distinguishable by the nature of the practices: the laundry detergents case involved a genuine pricing cartel, while in this case, suppliers were charged ‘merely’ with exchanges of sensitive information.
What is of particular interest in this Decision is that it provides a relatively complete guide on what might constitute sensitive information in the context of negotiations with retailers, as such negotiations embed a variety of factors of determination of prices. For instance, in addition to past and future price changes, the FCA sanctions exchanges relating to commercial cooperation rates, turnovers and targets which were more or less detailed per retailers, the course of negotiations with the latter, promotions, or general sales conditions (including attached price grids and price scales), all such information enabling suppliers to know their future prices and to detect any deviations.
With so much information being exchanged and a gravity factor which remains significant (15 per cent against 20 per cent in the laundry detergents case), the fines could only have been large ... And the fines have, indeed, reached record levels, the overall amount being nearly a billion euros! The FCA at least seems to have refrained from sanctioning the detergent suppliers twice for the same practices, by excluding detergents from the calculation of the fine.
The impact of such sanctions will undoubtedly attract the attention of consumer groups, already aroused by the recent introduction of class actions in French law, in particular because the Decision states that the prices increases were ‘necessarily passed on’ to consumers. However, consumers may find it difficult to assess damages precisely, since the FCA found the econometric studies submitted by the prosecuted undertakings (in order to quantify the overpricing resulting from the practices) unconvincing.
In this context, speculation is permissible as to how consumer groups will be able to produce more convincing evidence in civil litigation: a pitfall that underscores the limits of class actions, since obtaining compensation will require the ability of ascertaining the amount of the damage actually incurred and not merely to show the existence thereof.